Lambert v Co-operative Insurance Society Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CAIRNS,MR. JUSTICE MacKENNA,LORD JUSTICE LAWTON |
| Judgment Date | 22 January 1975 |
| Judgment citation (vLex) | [1975] EWCA Civ J0122-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 January 1975 |
[1975] EWCA Civ J0122-2
Lord Justice Cairns
Lord Justice Lawton and
Mr. Justice Mackenna
In The Supreme Court of Judicature
Court of Appeal
On Appeal from Bow County Court
MR. L. LEWIS, Q. C., MR. V. LEVENE and MR. M. LAMBERT, instructed by Messrs. Hatten Asplin Channer & Glenny (Barking, Essex), appeared for the Appellant (Plaintiff).
MR. C. FAWCETT, Q. C., and MR. B. de SPEVILIE, instructed by MR. W. R. Kirk, appeared for the Respondents (Defendants).
I have asked Mr. Justice MacKenna to give the first judgment.
This case concerns the duty of disclosure by an applicant for insurance. The question is whether, as the trial judge has held, he is bound to disclose every circumstances which would influence the judgment of a prudent insurer in fixing the premium or determining whether he will take the risk, or whether, as the appellant contends, the duty in the lesser one of disclosing such circumstances as a reasonable man might expect would influence that prudent insurer's judgment.
The facts are few and undisputed. In April, the plaintiff, Mrs. Lambert, signed a printed proposal form for one of the defendant company's "All Risks" insurance policies to cover her own and her husband's jewellery. Mrs. Lambert's answers to the questions on the form were filled in by Mr. Jacobs, an insurance agent. The form lifted the article in question, which were ten in number, of a then total value of Mrs. Lambert stated, in answer to a question on the form, that three of them, items 8, 9 and 10, belongs to her husband and were worn by him. No question was asked about any previous convictions of Mrs. Lambert, her husband or any member of her family and she gave no information about them. Her husband, with whom she lives, had, to her knowledge, been convicted some years earlier in December, 1963, of receiving 1,730 cigarettes knowing them to have been stolen and had been fined £25.
The defendant company, who knew nothing of the conviction, issued a policy. Condition 2 expressly provides that the policy shall inso facto be void if there shall be an omission to state any fact material for estimating the risk.
From year to year the policy was renewed on Mrs. Lambert's application, made at the defendant company's invitation, new articles being occasionally added to the list, including some which she told the insurance company belonged to her husband. The last application for renewal was in March, 1972. Before this application was made the husband had been convicted for a second time in December, 1971, of two offences of dishonesty, one of conspiring to steal from British Road Services Limited and the other of theft from that company, the stolen goods being a carton, 30 shirts, record players and speakers. He was sentenced to 15 months imprisonment.
At the time when she made this application Mrs. Lambert of course knew of the conviction, but she did not disclose it to the insurers, who knew nothing of it. The policy was renewed. On 30th April 1972, during the period of renewal seven items of the insured jewellery, then valued at £311, were either lost or stolen. Claim was made by Mrs. Lambert for this amount and was repudiated by the defendant company, on the ground that before the contract of insurance was concluded she had failed to disclose her husband's first conviction and, on the further or alternative ground, that she had failed before the renewal in March, 1972, to disclose the second conviction.
Only one witness was called at the trial, Mr. Duckworth, the defendant company's branch manager, a man of long experience. He said his company would have wished to know in 1967 of the first conviction and, if they had known, they would have given it careful consideration, but would probably have issued the policy, just the same. If he had known of the 1971 convictions he would not have invited its renewal. The proposer's previous convictions was a matter of great importance, and herhusband's, he said, were of equal importance. He said that his company's consideration of the proposal would have been affected by the convictions of either.
It was contended at the trial, on Mrs. Lambert's part, that the duty was to disclose only what a reasonable assured would consider material. For the defendant company it was contended that the duty was to disclose every fact which would affect a prudent insurer. The trial judge, His Honour Judge Ranking, accepted the defendant company's test in preference to Mrs. Lambert's and, applying this test, decided the case against her. Dealing with the evidence, he said that he found Mr. Duckworth to be an extremely responsible witness, a very mature person. He regarded him as an expert witness. He said that he accepted his evidence. He stated his findings in these words: "When the policy was due for renewal in 1972 had Mr. Duckworth been informed he would not have invited renewal. That conviction" - meaning the conviction in December 1971 - "was most certainly a material fact and I accept his evidence that that fact would have influenced his judgment and that of a prudent insurer. I think, on a balance of probabilities, that a prudent insurer would not have continued the risk". After stating that he rejected the test of the reasonable assured, he ad ed that he thought that a reasonable assure would not have considered the second conviction to be material.
Everyone agrees that the assured is under a duty of disclosure and that the duty is the same when he is applying for a renewal as it is when he is applying for the original policy. The extent of that duty is the matter in controversy. There are, at least in theory, four possible rules or tests which I shall state. (1) The duty is to disclose such facts only asthe particular assured believes to be material. (2) It is to disclose such facts as a reasonable man would believe to be material. (3) It is to disclose such facts as the particular insurer would regard as material. (4) It is to disclose such facts as a reasonable or prudent insurer might have treated as material.
Section 18 of the Marine Insurance Act, 1906 , chooses the fourth. Sub-section (1) of that section provides that: "The assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known by him. If the assured fails to make such disclosure, the insurer may avoid the contract". Sub-section (2) is in these words: "Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk".
There is no obvious reason why there should be a rule in marine insurance different from the rules in other forms of insurance and, in my opinion, there is no difference. The extent of the duty in non-marine cases was considered by the Privy Council in Mutual Life Insurance Company of New York v. Ontario Metal Products Company Limited, 1925 Appeal Cases, 344) the Board consisting of Viscount Haldane, Lord Dunedin, Lord Atkinson, Lord Wrenbury and Lord Salvesen, the last of whom gave the judgment. The policy was one of life insurance and the assured on applying for the policy was required to state on an application form the name of every physician or practitioner who had prescribed for him, ortreated him, or been consulted by him in the past five years. He had in good faith omitted the name of one physician, a Dr. Fierheller. The law of Ontario governed the contract, and there was a statute of that province which provided that no contract should be avoided by the inaccuracy of any statement in the application, unless it was material to the contract, and that the question of materiality should be one of fact for the jury or the court. There was no definition of materiality, and the Canadian judges were not agreed about the proper test.
I shall quote from the judgment of the Board at pages 350 and 351 of the report dealing with this point. It reads: "The main difference of judicial opinion centres round the question what is the test of materiality? Mr. Justice Mignault thought that the test is not what the insurance would done but for the misrepresentation or concealment, but" - quoting that judge's words - "'what any reasonable man would have considered material to tell them when the questions were put to the insured'". The Board differed from Mr. Justice Mignault. Lord Salvesen said: "Their Lordships are unable to assent to this definition", and he went on to consider other tests of materiality. He rejected the insurance company's argument that by putting the question the company had shown that it was important for them to know whether the proposed had been in the hands of s medical man within five years of his application. He considered a second, alternative test proposed by the insurance company, "if the fact concealed had been disclosed, the insurers would have acted differently, either by declining risk at the proposed premium or at least by delaying consideration ofits acceptance until they had consulted Dr. Fierheller". The Board accepted this second test, omitting the words about delay. Lord Salvesen said: "If the former proposition were established in the sense that a reasonable insurer would have so acted, materiality would, their Lordships think, be established, but not in the latter if the difference of action would have been delay and delay alone. In their view, it is 9 question of fact in each case whether, if the matters concealed or misrepresented had been truly disclosed, they would, on a fair consideration of the evidence, have influenced a reasonable insurer to decline the risk or to have stipulated for a higher premium".
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